Tag Archives: overtime

Questions For Andrew Puzder, Trump Nominee for Labor Secretary

 

(Post by Rick Dacri, January 12, 2017)

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President-Elect Trump has nominated Andrew Puzder for Secretary of Labor. Puzder is a successful businessperson, lawyer, and CEO of CKE Restaurants, the parent company of fast food chain’s Hardee’s and Carl’s Jr.

The mission of Labor is “to foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.” They are also responsible for investigating minimum wage violations, overtime infractions, and worker safety laws.

Puzder has taken positions in opposition to many of the regulations the DOL oversees, including the federal minimum wage, worker eligibility for overtime, the Affordable Care Act (Obamacare) and sick leave polices.

The U.S. Senate is scheduled to begin confirmation hearings on Puzder in February.

I have put together 18 questions that I believe the Senate should ask the nominee:

  1. What qualifies you to be the next Secretary of Labor?
  2. You have opposed the raising of the federal minimum wage. Why? What do you believe is an adequate minimum wage?
  3. You indicated a proposed $15 minimum wage would force businesses to automate their operations and thereby eliminate jobs. Do you believe that a minimum wage increase drives the need for automation or is automation a tool for productivity? If wages collapsed, would businesses stop automating?
  4. According to the Economic Policy Institute, CEO pay has grown 90 times faster than the typical worker pay since 1978. Due to this unequal growth, average top CEOs now make over 300 times what typical workers earn. Do believe wage disparity is a problem in this country and what, if anything, should Labor or the Trump administration do about this?
  5. The Department of Labor oversees the federal wage and hour division, which ensures that workers are paid for all the hours they work. Yet in California, your franchise restaurants have been fined over $20 million for wage and hour violations. Can you address this issue and what steps did you take to remedy this problem in franchises you control. Secondly, what steps will the DOL take, under your reign, to enforce wage and hour laws?
  6. A Roc United survey given to your franchise store employees in California, found that a third of those employees were not given meal breaks after working at least 5 hours, in violation of the state’s worker break laws. 79% said they also served or prepared food while they were sick. Can you address these issues and what steps did you take to remedy these problems in franchises you control. Secondly, what steps will the DOL take, under your reign, to enforce break laws?
  7. You are also on record opposing sick leave policies, yet many workers in your franchise restaurants are preparing and serving food while sick. Are you concerned about endangering both your customers and employees? Should sick leave laws be mandated?
  8. Bloomberg did an investigation of your company’s franchises. They found that in 60% of the DOL investigations in your restaurants, there were minimum wage and overtime violations. Again, can you address this issue and what steps did you take to remedy this problem? Secondly, what steps will the DOL take, under your reign, to enforce wage and hour laws?
  9. President-Elect Trump has indicated he supports 6 weeks of paid maternity leave. You have stated that mandatory leave creates undue burdens on business. How directly do leaves create a burden, and as Labor Secretary, will you support or ignore the President-Elect’s initiative?
  10. According to a review of inspection records with the Occupational Safety and Health Administration since 2000, the year your took over as chief executive of CKE, Hardee’s and Carl’s Jr. locations have incurred at least 98 safety violations, 36 of them listed as serious. OSHA defines a “serious” violation as one that could result in death or grave physical harm that the employer should have been aware of. Can you address this issue and what steps did you take to remedy this problem in franchises you control? Secondly, since OSHA and worker safety fall under DOL’s responsibility, what steps will the DOL take to enforce these laws?
  11. Your company has introduced commercials that include women wearing skimpy bikinis and lingerie while eating burgers. In response, you stated in a 2015 Entrepreneur interview, “I like our ads. I like beautiful women eating burgers in bikinis. I think it’s very American. I used to hear, brands take on the personality of the CEO. And I rarely thought that was true, but I think this one, in this case, it kind of did take on my personality.” My questions, is this your personality, as you stated? Do you believe these ads objectify women? What kind of tone does this set in your workplaces?
  12. 2/3 of female workers in restaurants operated by you, claim that they have been sexually harassed by your customers. Many employees indicated that these customers mentioned those ads. Were you aware of this and what is your plan to address this?
  13. Do you believe that sexual harassment in the workplace is a legitimate issue and what steps should employers take to eradicate it?
  14. Are there any federal labor laws that you would eliminate and if so, which ones and why?
  15. Do you believe there are any new labor laws that should be initiated? What are they and why are they needed?
  16. President-Elect Trump stated that he would like to eliminate unemployment compensation fraud. How big a problem is it and how could you eliminate it? Please be specific.
  17. You have opposed the Affordable Care Act. What specifically is the problem with the Act? Are their components of it that you would like to keep? What would you replace the Act with, what would it cover and not cover, and will it be cheaper than the current ACA?
  18. You have stated that we should cut government benefit programs because workers turn down promotions to keep such benefits, such as food stamps. Please explain this and tell us how wide-spread a problem this is?

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Final Overtime Rules for Private & Public Sector Employers

 

Unknown(Post by Rick Dacri, June 1, 2016)

The Department of Labor’s (U.S. DOL) changes to overtime eligibility have been approved and are scheduled for a December 1, 2016 implementation. The waiting is over and all employers need to immediately prepare. No one will be able to avoid this.

I have outlined below a summary of the changes that apply to both private and public sector employees. Remember, this is a summary and does not constitute a complete review of all the changes to the rules nor should it be considered legal advice.

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

  1. Sets the salary threshold under which employees would be nonexempt—required to receive overtime pay (regular hourly rate x 1.5 for all hours worked beyond 40 hours per week) at $913 per week or $47,476 annually for a full-year worker, more than doubling the salary threshold from the current level of $23,660.
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test, to $134,004; and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years.
  4. Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

Earning above the $47,476 annual ($913 per week) salary level do not automatically classify an employee as exempt from mandatory overtime pay, as the duties test still comes into play.

This is a significant change to the law and all employers should review their plans now, before the December 1, 2016 implementation. Don’t wait, as changes will be complex and contain plenty of pitfalls.

To avoid problems with existing exempt workers currently being paid less than the new threshold, your options include:

  1. Reclassify affected workers as nonexempt, or
  2. Increase the employees’ salaries to at least $47,476, or
  3. Reduce the hours of these workers, or
  4. Pay a lower hourly rate so that, when multiplied by time-and-one half, weekly compensation remains unchanged

As I have noted in previous posts, none of these steps are ideal and are likely to result in employee relation issues and increased payroll costs. To make matters worse, the DOL has stepped up enforcement, expecting to dole of the law out fines, attorney fees and back pay for violations.

Rules for State and Local Governments:

The FLSA contains several provisions unique to state and local governments, including compensatory time off, under certain provisions.

  • Comp Time: State or local government agencies may arrange for their employees to earn comp time instead of cash payment for overtime hours.
  • Fire and police small-agency exemption: The FLSA also provides an exemption from overtime protection for fire protection or law enforcement employees, if they are employed by an agency that employs fewer than five fire protection or law enforcement employees, respectively.
  • Work periods rather than workweeks for fire protection or law enforcement employees: Employees engaged in fire protections or law enforcement may be paid overtime on a “work week period” basis, rather than the usual 40-hour work week of the FLSA.

Not Affected by Changes:

Many employees won’t be affected by the final rule:

  1. Hourly workers: The new threshold will have no impact on the pay of workers paid hourly.
  2. Workers with regular workweeks of 40 or fewer hours: To the extent that many salaried white-collar staff have jobs where they work no more than 40 hours, the changes to the overtime rules will have no effect on their pay.
  3. Law enforcement and fire protection employees who regularly work hours that conform to the longer work periods permitted for such employees, the changes will also not impact their pay.
  4. Workers who fail the duties test: Salaried workers who do not primarily perform executive, administrative, or professional duties are not eligible for the white-collar overtime exemption and therefore are not affected by the final rule.
  5. Highly compensated workers: White collar workers who fail the standard duties test but are “highly compensated”—earn more than $134,004 in a year—are almost all ineligible for overtime under the highly compensated employee exemption, which has a minimal duties test.
  6. Police and fire employees in small agencies: Fire protection or law enforcement employees in public agencies with fewer than five fire protection or law enforcement employees respectively will continue to be exempt from overtime.
  7. Elected officials, their policymaking appointees, and their personal staff and legal advisors who are not subject to civil service laws
  8. Public employees who have a comp time arrangement

To avoid problems and lawsuits:

  • Audit your compensation program and pay practices for compliance
  • Review the classification of all exempt workers, particularly those being paid under $47,476
  • Put in place a safe harbor policy, which states that if an employee feels he/she has been incorrectly paid, to bring it to your attention for review.

Develop a plan now to implement before the December 1 deadline. If you have questions, contact the Dacri HR HelpLine.

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Exempt? Nonexempt? What’s it mean?

I am regularly asked the difference between exempt and nonexempt and whether that means the same as classifying someone as salaried or hourly. In this 3 minute video, I explain how to properly pay and classify your workers. I will explain when someone should be classified exempt, nonexempt, salaried or hourly and how to conduct the Fair Pay Test required under the Fair Labor Standards Act (FLSA).

 

Other posts that might interest you:

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Overtime Eligibility to Double: Prepare for Changes

images(Post by Rick Dacri, August 24, 2015)

The Department of Labor’s (U.S. DOL) proposed change to overtime eligibility is likely to force all employers to review and make changes to their compensation plans prior to the expected 2016 implementation.

Under the proposed rule, the salary threshold under which employees would be nonexempt—required to receive overtime pay (regular hourly rate x 1.5 for all hours worked beyond 40 hours per week), would be $970, or $50,440 per year for a full-time worker, more than doubling the salary threshold from the current level of $23,660. Afterward, the salary-level threshold would be updated annually based either on the percentile or inflation.

Earning above the $50,440 annual ($970 per week) salary level does not automatically classify an employee as exempt from mandatory overtime pay, as the duties test still comes into play.

This is a significant change to the law and all employers should review their plans now, before the likely 2016 implementation period. Don’t wait, as changes will be complex and contain plenty of pitfalls.

To avoid problems with existing exempt workers currently being paid less than the new threshold, your options include:

  1. Reclassify affected workers as nonexempt, or
  2. Increase the employees’ salaries to at least $50,440, or
  3. Reduce the hours of these workers, or
  4. Pay a lower hourly rate so that, when multiplied by time-and-one-half, weekly compensation remains unchanged

None of these steps are ideal and are likely to result in employee relation issues and increased payroll costs. To make matters worse, the DOL has stepped up enforcement of the law, doling out significant fines, attorney fees and back pay for violations.

Some other problematic areas for employers that should immediately be addressed include:

  • Misclassifying employers as exempt, when they should be non-exempt when the duties test is applied
  • Misclassifying individuals as independent contractors when they are bona-fide employees
  • Failing to pay for “off the clock” work, including non-exempt employees working, unpaid, during breaks; bringing work home; being required to respond to emails, calls and texts, etc.

To avoid problems and lawsuits:

  • Audit your compensation program and pay practices for compliance
  • Review the classification of all exempt workers, particularly those being paid under $50,440
  • Review the classification of all independent contractors
  • Put in place a safe harbor policy, which states that if an employee feels he/she has been incorrectly paid, to bring it to your attention for review.

Develop a plan now that can be rolled out in 2016 when (and if) the law changes. Call me if you need help.

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LinkedIn Gets Burned with Overtime Violations

UnknownPosted by Rick Dacri, August 26, 2014

Wage and hour violations are easy to commit, tough to mitigate, and can cost you a bundle. Ask LinkedIn. The Department of Labor has ordered them to pay nearly $6 Million in overtime-back wages and liquidated damages to 359 former and current nonexempt employees. The violation? Not having the right tools in place for some employees and their managers to properly track their hours. In other words, they probably didn’t record the hours the employees worked and didn’t pay them overtime for any hours worked over 40. Simple stuff, but areas where supervisors frequently get sloppy, employees get angry for not getting paid and companies get burned.

As part of the settlement, LinkedIn also agreed to do the following:

  1. Provide compliance training and distribute its policy prohibiting off the clock work to all nonexempt employees and their managers;
  2. Meet with the managers of the current affected employees to remind them that overtime work must be recorded and paid; and
  3. Remind employees of LinkedIn’s policy prohibiting retaliation against any employee who raises concerns about workplace issues.

My advice: I strongly recommend that you review your current pay practices, not just your policy. Talk to your supervisors and managers to make sure they are fully complying with the law. Sometimes, supervisors, in an effort to comply with no overtime policies and to stay within their budgets, improperly enforce the policy and commit infractions.

The Department of Labor is vigilant in monitoring and enforcing wage and hour violations. Their penalties are steep. Call me if you need assistance in ensuring you’re fully complaint.

Other similar posts by Rick Dacri that you may find helpful:

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FLSA: Change in Law Means Employers Pay More

 

(This post was written by Rick Dacri, March 15, 2014)

President Obama directed the U.S. Department of Labor to update the Fair Labor Standards Act (FLSA) to require employers to pay more of their salaried employees overtime.  As you may know, under FLSA, employers must pay non-exempt employees (hourly) overtime pay at a rate of one and a half their regular rate of pay for hours worked in excess of 40.  Exempt workers (usually salaried) are “exempt” from the overtime pay requirements as long as the individuals are employed in a bona fide executive, administrative, professional, or outside sales force capacity.  To qualify for this exemption, the employee must be paid at least $455 per week or $23,660 per year and meet certain other requirements under the FLSA.  

The President wants to significantly raise this pay threshold, making many exempt workers non-exempt and requiring employers to now pay them overtime.

 

While it is estimated that it will take the Department of Labor at least a year to finalize any changes, it is a good idea to begin reviewing all your exempt positions now. Positions should be “tested” to ensure they meet the current means test (paid at least $455 per week) and qualify under the duties test. This latter test is complicated, but that should not deter you. The penalties for misclassifications are significant.

 

If you need some assistance in testing your exempt positions, give me a call at 207-967-0837 or email me at rick@dacri.com.

 

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Breaks for Salaried Employees

This question came in from one of my HR HelpLine clients.

Question: Am I required to provide breaks for my salaried exempt employees? We are a Maine employer.

Advice: No. Maine law requires that you provide nonexempt employees an unpaid break of 30 minutes, after six consecutive hours of work. Exempt employees, such as executives, professional and outside sales people, are exempt from the law. As an employer practice, you may opt to give a break, but one is not required.

If you would like to learn more about Dacri’s HR HelpLine service, where you can get all your workforce questions answered, click HR HelpLine.

You may also want to read these posts:

  1. Pay Procedures: How to Avoid Wage and Hour Problems
  2. Exempt Pay: Can You Dock Pay for Illness
  3. Employee Classifications: When Must You Pay Overtime

 

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